Greece's Eurobank Wants Bulgaria Unit Self-Funded by 2012
EFG Eurobank, Greece's second-largest lender and owner of Bulgaria's Post Bank, plans its units in southeast Europe to be fully self-funded by 2012 and not to depend on their parent.
"We are trying to optimise the funding of our banks in New Europe. Through local deposits and autonomous funding in the local or international market, by 2012 the total funding of our banks in New Europe should stop relying on the centre," the group's chief executive told shareholders on Tuesday.
Nanopoulos said Greek lenders' presence in southeast Europe was a strategic asset, helping banks generate income outside Greece where the economy is suffering because of the debt crisis.
"(The presence in southeast Europe) is an important national trust which Greek banks must secure in the future," he said.
Greek banks control about 28% of banks' total assets in Bulgaria and about a sixth in Romania and Serbia.
The Bulgarian banking system is concentrated, with most of the assets owned by large financial institutions from the eurozone.
The five biggest banks are UniCredit Bulbank; DSK Bank, a unit of OTP Bank Nyrt., Hungary's largest bank; United Bulgarian Bank, owned by the National Bank of Greece SA; Raiffeisenbank Bulgaria and Eurobank EFG Bulgaria.
Greek banks' risk appetite is now much lower compared to the years before the crisis, but local top bankers have commented that since these banks are part of the conservatively regulated Bulgarian banking system, they still represent an asset for the Greek owners.
Amid fears that the Bulgarian banks are more susceptible to possible shocks caused by Greek banks' funding, bankers have forecast that these will go through a process of consolidation or conservatism, but have ruled out dramatic problems for the Bulgarian environment.
At the beginning of March international agency Moody's lowered the credit ratings of six Greek banks, EFG Eurobank, because of persistent pressure on liquidity, asset quality and their exposure to Greek government debt.
The move came just days after the agency slashed the country's sovereign rating by three-notches.
Explaining its action, Moody's said a government's credit strength serves as a key input in assessing the capacity of a country to support its banking system.
"Although Moody's central scenario is that holders of Greek government debt will not bear losses, the rating agency believes the likelihood of a sovereign default or distressed exchange has risen, as denoted by the new B1 government rating," Moody's said.
Moody's said the downgrade also reflected Greek banks' limited funding options and their dependence on ECB funding, which accounts for at least 20 percent of their balance sheet.